Correlation Between Netflix and Waste Management
Can any of the company-specific risk be diversified away by investing in both Netflix and Waste Management at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Netflix and Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Netflix and Waste Management, you can compare the effects of market volatilities on Netflix and Waste Management and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Netflix with a short position of Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Netflix and Waste Management.
Diversification Opportunities for Netflix and Waste Management
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Netflix and Waste is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Netflix and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management and Netflix is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Netflix are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Netflix i.e., Netflix and Waste Management go up and down completely randomly.
Pair Corralation between Netflix and Waste Management
Given the investment horizon of 90 days Netflix is expected to generate 1.84 times more return on investment than Waste Management. However, Netflix is 1.84 times more volatile than Waste Management. It trades about 0.11 of its potential returns per unit of risk. Waste Management is currently generating about 0.09 per unit of risk. If you would invest 42,397 in Netflix on September 4, 2024 and sell it today you would earn a total of 47,377 from holding Netflix or generate 111.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.9% |
| Values | Daily Returns |
Netflix vs. Waste Management
Performance |
| Timeline |
| Netflix |
| Waste Management |
Netflix and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Netflix and Waste Management
The main advantage of trading using opposite Netflix and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Netflix position performs unexpectedly, Waste Management can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Waste Management will offset losses from the drop in Waste Management's long position.| Netflix vs. Paramount Global Class | Netflix vs. Roku Inc | Netflix vs. Warner Bros Discovery | Netflix vs. AMC Entertainment Holdings |
| Waste Management vs. Gold Road Resources | Waste Management vs. Strategic Investments AS | Waste Management vs. EAT WELL INVESTMENT | Waste Management vs. Kaufman Broad SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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